BUSINESS MATTERS

No surety UA can tap alcohol for more cash

As is often the case, the Frequently Asked Questions section really didn’t answer my biggest questions.

So I emailed the University of Arkansas to follow up on a release touting alcohol sales to indoor club and suite patrons at Reynolds Razorback Stadium. Nowhere in the release did the UA explain what the potential financial benefits might be for its $80.6 million athletic department budget.

College athletics, as I feel compelled to occasionally remind folks here in Business & Farm, is nothing if not a business. Athletic Director Jeff Long is always looking for additional revenue streams and in doing so has successfully increased the budget 58 percent since he took over in 2008.

So, I wanted to know how much additional money might be added to the budget from alcohol sales. What would becoming, as the release explained, “the eighth SEC school to sell alcohol in the club area” mean for the bottom line?

Arkansas isn’t entirely sure.

Athletic department spokesman Kevin Trainor said because brands have not been selected nor prices set, etc., “It would be difficult to make any sort of speculation on potential revenue.”

Not surprisingly, I never heard back on a follow-up question regarding what schools the UA has studied and what their reported success has been in selling beer and wine. Arkansas, it should be noted, sent out the news release without permit approval from the state.

While the flagship surely has done its homework on the process and potential for making money, here’s an important thing for the UA to note, just in case it hasn’t fully explored the issue: Guaranteeing your patrons alcohol doesn’t guarantee a boost in the bottom line.

As the University of Minnesota showed us last year, adding bartending to a long list of game-day services and responsibilities isn’t always lucrative.

Minnesota LOST money during the 2013 season, according to reports. It was the Golden Gophers’ first attempt at selling beer and wine, and while it generated $900,000 in sales, the expenses exceeded that.

After paying for additional security, equipment and other safety- and alcohol-related expenses, Minnesota reportedly was in the red $16,000.

Lost money. Selling booze. To college football fans.

It sure seems like a guaranteed moneymaker.

Arkansas’ Razorback Foundation surveyed ticket holders last year about the prospect of adding alcohol in the suite and club levels, so it stands to reason the school has a sense it would be a popular option among fans. Popular enough, you’d hope, to provide the department with better results in Razorback Stadium than the folks at Minnesota saw.

Other schools seem to have found a way to make money on stadium alcohol sales.

West Virginia began selling beer in 2011 and has added between $500,000 and $1 million to the budget each season, according to reports. Plus, Athletic Director Oliver Luck said the school has - believe it or not - cut down on alcohol-related security issues by selling alcohol.

Luck also told Athletic Management magazine that the school generated additional money through advertising partnerships with alcohol sponsors. That money is in addition to sales generated by charging between $7-$9 per beer.

According to a 2009 Wall Street Journal article, Sodexo Inc. typically returns between 25-50 percent of concession sales to the universities it serves and charges between $6-$8 per beer. The UA is partnered with Sodexo.

Arkansas said it is still evaluating what brands of beer and wine will be sold, and at what prices. Those added costs Minnesota experienced must also be factored into the equation when figuring what sort of revenue is possible.

Indoor club and suite seating accounts for more than 9,000 seats in the stadium. Could this result in additional sales of indoor club seats? Perhaps. It might also make the proposed $90 million north end zone club seat expansion, once completed, even more popular with ticket buyers. Even so, not all of those folks are of age, and there is no guarantee that the ones who are 21-and-up will want to partake, especially with a single beer running six-pack prices.

Will selling beer and wine make money for Arkansas? Seems there are some additional questions worth answering before anybody can know for sure.

If you have a tip, call Chris Bahn at (479) 365-2972 or email him at [email protected]

Business, Pages 67 on 02/16/2014

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